The University of Miami won a major legal battle Tuesday against a former top medical school official who accused former President Donna Shalala of firing him a decade ago in retaliation for ordering an independent investigation into over-billing at an organ-testing lab at the famed college. Transplant Institute.
Former chief operating officer Jonathan “Jack Lord” had hoped a federal jury would award him millions of dollars in arrears and other damages due to his dismissal. But a six-person federal jury in Miami found that Shalala had terminated Lorde for reasons unrelated to his “protected activity” as a whistleblower at UM Medical School.
The jury came to that conclusion, and did no damages, though it did find that Lord, as the medical school’s second-in-command, “engaged in protected activity” as a whistleblower under federal law and “knew” that Shalala had previously decided to terminate His tenure in office lasted 10 months in January 2013.
Shalala, 81, testified at trial that she fired Lord because she saw him as a “disruptive force” who may have helped restore financial stability in the public health system through massive layoffs. But she defended her act, arguing that he eventually poisoned the medical school by treating laid-off staff harshly, lowering staff morale and losing the respect of his colleagues.
“He was fired for his conduct on the medical school campus,” Imperial University’s defense attorney, Eric Isikoff, said during closing arguments on Monday, citing a petition filed by doctors with hundreds of signatures blaming Lord and the school’s dean for their “failed leadership”.
“The evidence is all about an opportunistic effort to get a pool of money out of the University of Miami,” Iszikov said, adding that the case about the organ testing lab audit was “nonsense” and that Shalala “knew nothing” about over-billing and potential Medicare fraud in a testing lab. Members before Lord.
But on this last point, the jury concluded otherwise – though it did find that Shalala shot Lord in retaliation for the lab’s whistle.
Lord, 68, who attended UM as an undergraduate and medical school student, He testified that Shalala fired him after he authorized an external audit of the organ-testing lab in the department of surgery at Jackson Memorial Hospital, noting to her that she might owe Medicare at least $10 million for an unnecessary tissue exam. Lord also testified that he suspected the lab was committing Medicare fraud – and reported to senior colleagues, including the dean of the medical school and compliance officer – even though no criminal case had been brought against the university or individuals
“Her motive for firing Jack was to silence him” while closing the external audit and assigning him to UM auditors who did nothing, Jeffrey Sloman, Lord’s attorney, said during closing arguments.
“When the university backed down, he tried to do the right thing,” Sloman told the jurors.
After the jurors returned their verdict after five hours of deliberation, Sloman said, “It was very disappointing.”
The trial, presided over by US District Judge Cecilia Altonaga, provided very different accounts from the testimony surrounding Lord’s dismissal and a decade-old lawsuit. It also pulled the curtain on UM Medical School’s historic financial problems and turf wars between medical school departments and the influential doctors at Jackson Teaching Hospital, which is publicly owned but staffed by UM doctors.
The trial also signaled the return of UM. Last year, Lord’s False Claims Act case against the university led to UM’s $22 million settlement with the Department of Justice To resolve civil claims for bloated Medicare bills By a lab examining members of the school and other violations.
As the whistleblower, Lord received about $4 million from the settlement as a reward for starting the lawsuit against his former employer. However, this drawn-out dispute delayed the start of his wrongful termination trial—and the settlement itself could not be revealed to federal jurors.
The high-level staff feud began in March 2012 when the university, whose health care system was deeply incapacitated, appointed Lord, its longtime director of health care, as the No. 2 executive director of the medical school with a group rebuilding a medical program known as UHealth. The Lord was appointed by the Dean of the Faculty of Medicine, Pascal Goldschmidt, who dismissed him on orders from Shalala.
While collaborating with the Dean and other senior officials to organize the layoffs of some 900 employees, Lord received written cheers from his superiors for the financial transformation of the UM health system. At Goldschmidt’s request, Lord was assigned more duties as chief compliance officer at UM Medical School and increased from $763,000 to $913,000, court records show.
Despite the apparent turnaround at UHealth, Goldschmidt and Lord immediately became unpopular with layoffs, sparking a split among the medical school faculty, led by the influential chief of surgery, Alan Livingston. Their situation became vulnerable when Lord discovered the rising tensions between the departments of surgery and pathology at UM over organ lab testing of the Transplant Institute in Jackson. The Department of Surgery, under the direction of Livingston, dominated the profitable tissue testing laboratory.
But after two pathologists accused the surgery lab of overcharging Medicare and an anonymous letter to the U.S. Department of Health and Human Services accused it of fraud, Lord pushed for an independent investigation. Livingston, who did not appear as a witness at the trial, saw outside scrutiny as a threat and filed a complaint with Leonard Abbes, chairman of UM and UM’s board of trustees, according to emails and testimonies.
Prior to his termination, Lord Shalala, Dean of the Medical College and Board of Trustees of UM alerted him about allegations of fraud involving excessive billing at the organ screening laboratory, according to his testimony and court records. With the support of the medical school’s dean, Lord and another senior compliance official authorized an external audit of lab “billing irregularities” estimated at at least $10 million — information they brought to Shalala’s attention.
But instead of continuing to do so, Lord testified in his wrongful termination trial, Shalala shut down the independent audit under direct pressure from Livingston, introduced in-company auditing, and then fired the medical school’s director of operations.
Shalala testified that Lord’s firing was “not related” to his overbilling whistle and possible Medicare fraud at the UM organ screening lab in Jackson. She said she does not take revenge on the lord. She said, “Absolutely not.”
Shalala also denied that she was influenced by Livingston’s team in their decision to move the external audit of the member testing lab in-house under the supervision of UM auditors – and that this was not a cover-up. “The opposite,” said Shalala, who served as a cabinet member in the Clinton administration, a congresswoman from Miami for one term and is now studying at university.
However, Jennifer McCafferty, who was UM’s former chief medical compliance officer, testified Friday that she was “disappointed” to learn that Shalala had consulted with Livingston, closed the external review and brought it home. McCafferty, who is married to Shalala’s former chief of staff, Rudy Fernandez, testified that the university’s investigation into the organ screening laboratory “could have been compromised.”
According to testimony and trial records, UM’s internal auditors found no irregular billing or Medicare lab fraud in 2013. But later that year, the university agreed to pay Medicare $356,000 in connection with disputed billing for transplant lab tests by Department of Surgery at UM, records show. This payment was separate from UM’s multimillion-dollar settlement over the same issue with the Department of Justice last year.
“This internal audit was a fix and it was wiped under the rug,” Sloman, Lord’s attorney, said in closing arguments before the jury began deliberations late Monday.